We Think Prestige Consumer Healthcare Is Small but Mighty, Boasting Leadership in Niche Markets

Prestige Consumer Healthcare is one of the largest pure-play over-the-counter healthcare providers in the U.S. We expect the firm to grow through product innovations, increasing household penetration, and expanding its e-commerce presence. One way Prestige has tackled product innovations is through broadening its brands’ end markets; for example, Dramamine for a long time only played in the motion sickness space, but Prestige has spent the last number of years expanding its indication to the nausea market. While these outbreaks of categories can certainly expose Prestige to new competition, we believe it also affords the firm a new set of customers that it can win over. And given Prestige’s focus in small and niche categories, we don’t expect the company to try and compete with blockbuster brands from consumer packaged goods, or CPG, giants. Rather, we believe it will seek out adjacent categories that might be underpenetrated or composed of minor brands to displace with its recognizable brands.